Any tax question? Feel free to ask.

tax services,

Thank you so much for the reply.
Does my income also include money given by parents and relatives?

Goodtogo,

Money given by parents and relatives will be a form of gift for you unless they give you money for the service or good you provide to them. If they simply give you money, it won't be income for you. If you provide good or service in exchange of money, that will be included as income.

Good Person Tax Services, great job. You are clearly filling the void. One can easily go and google tax questions and do a little bit of study as well but we are what we are and we want someone to understand us culturally and philosophically. Then came you. Keep it up.

So I have a tax planning question for this year - so as not to fatten uncle sam. Both I and my spouse have W2 employment income. In our W4 forms, in line 5, we do not have any allowances claimed (Line 5 = 0), which means there are no possible wit holdings. Every paycheck uncle sam takes what he can, but I've always ended up paying again in March/April at the time of tax filing. We are filing 'Married filing jointly' and only claimed standard deductions. We still rent and do not own a house. This year our out of pocket medical expenses are $12000 but that is still not 10% of our AGI. We have no other income (except from brokerage account, but that too had Management fees and unrealized losses). What are possible avenues of saving through proper tax planning. (our estimated AGI this year may be approx $156K). Please advise. Thank you in advance.

Kalidasbhaisab,

Do you or your spouse have HSA (health saving account) at work or 401k benefit? If yes, I would like to know how much each of you are contributing?

On 401K, I am contributing around 10% of my paycheck and my spouse around 20%, this year we estimate that our (just ours and not adding employer's) 401K contribution will be around 22K. Only my spouse has HSA so she is deducting around $256 each paycheck (approx total annual contribution / decution = $6656, which we are paying for our installment Out of Pocket medical expenses for). Thank you.

Khalidasbhaisab,

Each of you can contribute $18,000 towards 401k. So, if you both do max amount, you can contribute $36,000 in total which will be an increment of $14,000 compared to your current contribution of $22,000. Thus saving (25% of $14,000) $3,500 in current year taxes.

Kalidasbhaisab,

You previously mentioned that you had unrealized loss in brokerage account. If you sell it and if had those stocks for less than a year,you can offset those losses fully against the income. For stocks help more than a year, there will be different tax treatment.

Tax services,
Thanks a lot.

You are welcome.

Hi, I use my one of my room in my residence to store some of the business supplies because of space constraints at my business location. Is there anyway I could deduct certain percentage of my monthly mortgage while filing tax ? Or better yet, can I pay reciprocal portion of my mortgage from my business account every month? Your feedback will be highly appreciated.

Bandhu,

Is your business incorporated or you file schedule C to report your business income?

Tax services,

I forgot to ask, what happens if I start working this year and make more than $10,000. Will I get penalty though I volunteered before I start working?

Please let me know.
Thanks in advance.

Goodtogo,

Yes you will be penalized for not having insurance if your income exceed above mentioned income. Eventhough you were volunteering, you will have to pay.

Its a S corp and I get schedule K-1 which is reported in my 1040.
Thanks.

Bandhu,

You should not be paying home mortgage interest from company's account. You always should keep business and personal stuff separate. You can do home office deduction for the space you used exclusively for business purpose. By exclusively, it means you can't use that other personal reasons beside the business use. There are different ways to deduct home office but benefit might not be that higher. Please see different options below.

1. You can rent the space to company. Company pay you rent, so it will be expense for the company and income for you.
2. It can be included as unreimbursed business expenses in itemized deduction of your 1040 which will be subject to 2% deduction. This case might give very little or no benefit at all depending on your other tax situation.

Hope this helps.

If Bandhu sell the house in gain, s/he need to recapture ( is this the right word) all the expenses s/he claimed and will be added back ( is that right )?

Who will be responsible for our wrong amout on tax file (of course if got caught in Audit by IRS ) ? Us or accountant who filed.

Magorkhe1,

You are right in the send that depreciation needs to be recaptured while determining loss and profit on selling of house. The gain upto $250,000 (single filer) and $500,000 (Married filing jointly) for principal residence will be exempt from paying taxes. Few requirements need to be met to qualify for it.

facebook,

The taxpayer (you ) will be responsible for your taxes. Obviously if an accountant makes mistakes knowingly or negligently, the accountant will be held responsible.The burden always lies on taxpayer(you) to make sure all of the income are reported on the tax return and taxes owed are paid correctly. You should always look at your tax return to make sure everything is included there.

You can hear people saying many times, I went to this accountant and got more refund. Going to good accountant will always help you as they help you in saving the taxes in legal way. Many people out there try wrong way to maximize the refund. Try legal way to save taxes instead of going wrong route.

Bandhu,

The most commonly missed expenses beside what you mentioned previously are as follow.

1. Licensing
2 Auto expense
3 advertising
4. Magazine subscription
5. Office supplies
6. Insurance
7. Depreciation of assets
Any other costs related to business

Yes you can deduct personal health insurance. I think you previously mentioned that you Own S-Corp.
If you’re an S corporation shareholder, the policy can be in your name or the S corporation’s name and either of you can pay the premiums. If the policy is in your name and you pay the premiums, the S corporation must reimburse you and include the premiums as wage income on your Form W-2.

Hope this helps.